Europe’s Stocks to Watch: KPN, Vivendi, Orange

Dutch telecommunications group Royal KPN NV (KPN.AE) shares climbed after the company announced its plan to sell German mobile business E-Plus to a unit of Spanish telecom group Telefonica SA (TEF.MC). Credit Suisse said “clearly this is the deal that KPN shareholders were hoping for at a decent multiple with a stake to play in the German recovery story.” That said, Credit Suisse raised concerns over possible reactions from EU antitrust bodies. Telefonica shares climbed 2.6%.

Meanwhile, French conglomerate Vivendi SA (VIV.FR) gained over 3% after saying it has entered into exclusive talks with Emirates Telecommunications Corp. to sell its controlling stake in Maroc Telecom, an African phone operator. If the deal goes through, Vivendi would receive €4.2 billion ($5.5 billion) in cash in exchange for its interest. The sale is thought to be part of a larger plan to focus more on media activities and away from telecom activities. Liberum Capital said it expects the market to re-rate Vivendi’s shares as the company has now demonstrated it can follow through on its restructuring plans.

Orange SA (ORA.FR), a French telecommunications operator, will invest €30 million ($39.5 million) in Dailymotion, a French video-sharing site, according to French daily Les Echos. Orange said it is trying to triple Dailymotion’s sales over the next three years and expects sales to rise to €100 million by 2016 from €37 million in 2012. Shares in Orange were up 2.1%.

The world’s biggest watchmaker, Swatch Group AG (UHR.VX) , posted a growth in gross sales of 8.7% for the January-June period, the company’s slowest half-yearly pace since the downturn of 2009. Swatch said China’s decelerating economy weighed on the luxury industry’s most promising market as exports to China fell nearly 19% in the first half. Still, Bank J. Safra Sarasin noted the sound outlook for the rest of the year. Swatch shares were up 3.3%.

Shares in chip maker STMicroelectronics NV (STM.FR) shares slumped over 6% after the company reported weak second-quarter results late Monday. The company posted a loss of $152 million, compared with losses of $75 million a year earlier, and a drop in sales of 4.8% to $2.05 billion. STM said it attributes its results to new product launches and efforts to expand geographic and customer coverage with new accounts and distributors. It also said it continues to refocus itself on making electronic sensors and new technology for making smaller transistors.